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Plan Before You Travel; Without A Visa You Might Need To Stay Home

Ellen Miller, 63, and her husband Robert, 68, avid boaters, were sailing from Provincetown, MA to Newfoundland, Canada six years ago when a freak accident left them marooned for the summer in Shelburne, Nova Scotia. While he recovered from a badly sprained ankle, she went house hunting and found the retirement home of their dreams. They snatched up a four-bedroom, 100-year-old renovated Cape on one acre with a view of the ocean a quarter mile away for $140,000.

After relocating from western Massachusetts, where he had been a schoolteacher and they raised a family, the couple discovered a major glitch: They couldn’t spend more than six months at a time in Canada without a visa. It turned out the only way for them become permanent residents was for her to qualify as a skilled worker. Fortunately, she’s a nurse and at the time could easily meet the requirements (not so today, since the laws have become more stringent).

The process, which required they submit a volume of paperwork and take a medical exam, dragged on for nearly two years, costing them an estimated $8,000 in legal and application fees. Although the visa could be renewed with fewer hassles every five years, they decided the path of least resistance would be to apply for dual citizenship; they are now in the process of doing that.

“Never assume anything,” is her advice to others. Just because you buy a house in a foreign country doesn’t mean you have the right to live there.

That’s a valuable lesson to baby boomers who are thinking of spending all or part of their retirement years living abroad. When it comes to requirements for visas and citizenship, each country has its idiosyncrasies. The best source of information is the embassy website for the country where you are planning to live and its United States consulate. Depending on your destination and how much time you want to spend there, these are your options.

Apply for a retirement visa. These are rare. Most countries in Europe, as well as the U.S. and Canada, don’t offer them. In those that do, the terms vary enormously. For example, in Thailand they are only issued for a year at a time, and you must report to immigration every 90 days to verify your address. Like other countries that offer these visas, Thailand has financial requirements (at least $26,000 in the bank and monthly income of $2,000). In Australia, you can get a four-year retirement visa, but you must have at least $777,865 worth of assets if you want to settle in an urban area ($518,400 for the boondocks), and make an investment of an equal amount in the state or territory where you are settling.

Invest in a local business. Some countries offer a visa (Colombia and Venezuela, for example) or citizenship (Nevis and St. Kitts) for making a business investment — typically between $500,000 and $1 million, immigration experts say. Since most retirees do not want to work, the question is whether this can be a passive investment, meaning that you put money into a business, but do not play any role in running it.

For example, until recently under a federal Canadian program and one in Québec, you could put money into a fund that would make loans to companies and you would get your principal back after five years, without interest. With these programs, you needed to invest at least $800,000 and have a net worth of at least $1.6 million. (These amounts are in Canadian dollars.) This was a sweet deal for people from the Middle East and China who wanted to have the option of a permanent residence in Canada, says Henry Chang, an immigration lawyer with Blaney McMurtry in Toronto. But both these programs are currently on hold.

What’s still available are programs run by the Canadian provinces (the states), rather than by the federal government, but they require you own at least a third of the company (rather than investing in a fund that the government runs) and be actively involved in operating that business – you can’t just be a passive investor. You can choose the business you want to invest in; start your own business; or relocate your company to Canada. There’s just no guarantee you will get your money back; you’re buying into a business, just as if you were investing in any other enterprise. Each province has its own program, can choose its own immigrants and set its own rules. So if you want to move to a particular area, you will need to check the rules for that province.

Use visas as needed. If you spend most of your time in the U.S. you may you may be able to avoid getting a visa. In most countries in the European Union, for example, you only need a visa if you plan to stay in the EU for longer than 90 consecutive days within a six-month period. This stems from the so-called Schengen Agreement, which 25 countries have signed. For example, it would allow you to spend spring and fall in the South of France, and travel freely to any number of other countries during that time. (You must leave the EU for 90 days before returning for another 90 days.)

Such visas are meant for temporary visits, not for long-term residents and border officials might deny you entry if they see you’ve used it repeatedly, cautions Alan Seagrave, a lawyer with Foley & Lardner in Miami.Concerned about that possibility when clients in their late 60s wanted to spend all of 2010 in Madrid studying Spanish, Seagrave recommended they get a student visa. If they had wanted to stay in Spain and live there full time once the program ended, that would have been a problem because “there was no retirement visa that they could avail themselves of,” he says.

Establish residency. That’s what Ron and Linda Audet, former schoolteachers, have done since they retired fulltime to Italy two years ago. It’s been a two-step process, starting with an extended stay visa that they got from the Italian Consulate before leaving the U.S. The next step was to apply for a “Residency Permit” (Permesso di Soggiorno), which must be renewed every two years until they’ve been there for six years. To get it they had to provide financial statements showing they could support themselves without working—which they’re not allowed to do. But with this visa they became eligible for government-sponsored health insurance at a very affordable rate. This was a big attraction since with few exceptions Medicare doesn’t cover them in Italy and they both have chronic medical conditions.

Become a citizen. In today’s increasingly global world, dual citizenship is not frowned upon the way it once was, immigration lawyers say. (India is one of the few countries that does not allow it.) Becoming a citizen frees you from having to hassle with visas, and allows you to remain indefinitely in the country of your choice. It also protects you from being disadvantaged by immigration law changes, like those recently adopted by Canada. The downside is that it will subject you to additional tax burdens — not just income, tax, but possibly wealth tax and estate tax too – though depending on the country you might also be subject to these taxes if you are a resident or own property there.

It’s unlikely that becoming a citizen of another country would cause you to lose your U.S. citizenship, but you should erase any doubt about that before making the move, says Chang, an expert on dual citizenship in the U.S. and Canada. Watch out for language in a country’s oath of allegiance that says you renounce your loyalty to another country, he advises. (There’s wording like this in the U.S. Oath of Allegiance.) The U.S. government could interpret it as evidence that you want to give up your American citizenship.

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